Most cryptocurrency tokens have an ongoing initial distribution, which includes locked tokens under vesting contracts. It is recommended to exercise caution when trading these cryptocurrencies in the week of the token unlocks to mitigate risks effectively.
The initial distribution of cryptocurrencies poses a significant challenge for investors, with each project implementing its unique model known as ‘tokenomics.’
In recent years, reserving over 50% of the total supply for the team, foundation, private investors, and advisors has become a common practice. These reserves are typically locked in vesting contracts, and their release often results in strategic sell-offs in the days or weeks following the unlock.
According to data from TokenUnlocksApp analyzed by Finbold on February 23, approximately $285.09 million worth of tokens are set to unlock in the market in the next seven days.
## Insights:
### Avoid trading dYdX (DYDX) amid massive unlock
dYdX (DYDX) accounts for nearly 45% of the total unlocked amount next week, making it a cryptocurrency to avoid trading. The decentralized exchange protocol is set to release 33.34 million DYDX tokens on February 29, valued at $130 million.
Private investors will receive the majority of the unlocked tokens, with 18.49 million DYDX tokens valued at $72.10 million likely to be sold off. The team will receive the remaining 14.85 million tokens, potentially leading to further sell-offs.
### Optimism (OP) token unlock
Investors should exercise caution when trading Optimism (OP) as it represents the second-largest unlock next week. The layer-2 protocol for Ethereum (ETH) will release 24.16 million OP tokens on February 29, amounting to $86.73 million.
The distribution of OP tokens will be evenly split between the team (‘Core Contributors’) and private investors, with the former receiving 12.75 million tokens and the latter receiving 11.41 million tokens.
### Echelon Prime (PRIME) Unlock
Echelon Prime (PRIME) is scheduled to unlock $20.44 million worth of 1.66 million PRIME tokens on February 28, a day before the other two aforementioned unlocks. Out of this, 912,040 PRIME tokens will go to the Parallel Studios reserve, while 750,000 will be allocated to private investors.
These insights highlight the potential risk associated with trading these cryptocurrencies next week. It is crucial to consider this information for effective risk management in the current market conditions.
Despite the expected sell-offs, the performance of these cryptocurrencies may still vary in the coming days. The crypto market remains highly volatile and unpredictable, emphasizing the importance of thorough research and caution in trading decisions.
**Disclaimer:** The content presented here should not be construed as investment advice. Investing in cryptocurrencies carries inherent risks, and investors should exercise caution as capital is always at risk in investment activities.
